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Closing Bell With Maria Bartiromo

News/Business. Maria Bartiromo. Analysis of the day's winners and losers in the stock market. New.

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01:00:00

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San Francisco, CA, USA

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Virtual Ch. 58 (CNBC)

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mpeg2video

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ac3

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528

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480

TOPIC FREQUENCY

Us 30, Illinois 9, Boehner 6, Washington 6, U.s. 4, Jeff Jordan 3, Joe Greco 3, Alabama 3, Geico 3, Maya 3, Louisiana 3, Instagram 2, John Harwood 2, Mississippi 2, China 2, T. Rowe 2, Florida 2, David Vitter 2, Pat Quinn 2, Dawn 1,
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  CNBC    Closing Bell With Maria Bartiromo    News/Business. Maria Bartiromo. Analysis of the  
   day's winners and losers in the stock market. New.  

    December 19, 2012
    4:00 - 5:00pm EST  

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has been the worst performing factor in terms of the investing a factors the last 20 years, so people want to talk about buying vol it's not worked. >> what are you to do in the person sitting at home were wondering i thought we were going off to the races here to end the year because i feel like we're getting a deal and now i'm not so sure. >> it still comes back to buying high quality assets which we believe are in the u.s. big -- cap with big brand names with great fundamentals, and they are right here in the u.s.? make that the last word. the bell is ringing. maria will pick up the second half of the "closing bell" in just a moment. and it is 4:00 on wall street. do you know where your money is? hi, everybody, welcome back to the "closing bell." i'm maria bartiromo on the floor of the new york stock exchange. today fading optimism about a deal to avoid the fiscal cliff weighed on stocks. here's how we're finishing on
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wall street close to the lows of the day with a decline of the dow jones industrial average of 98 points at 13,252. once again we saw both sides digging n.no deal on the fiscal cliff in washington and stocks sold out. nasdaq composite off a third of a percent and the s&p 500 down 11 points, and the countdown continues. only seven trading days left until the fiscal cliff dead livent was today the beginning of a bigger selloff if a deal does not come soon? joining me right now is a cnbc contributor from western destination and steven hammers from the emp fund and our own rick santelli and joe greco from meridian equity partners finishing up his trades and will join us momentarily. good to see everybody. michael, let me kick it off with you. i know it's really hard to navigate every day because every day there's a new expectation in the market, but it felt like today was about the fiscal cliff. if we go over the fiscal cliff with no deal, is that a significant issue for the markets early january?
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>> if we go over the fiscal cliff without a deal, we're probably looking at a 6%, 7% correction and then in my view you load up on equities. you know, maria, we're starting to put a little bit of risk on. never took risk off. not one of the believers we'd have a 10%, 15%, 20% drop like you heard a month or so ago. we stayed the course. it's actually worked out well, and we're starting to put on a little more incremental risk because of the optimism. we think there's going to be some kind of a deal. if not in the next seven days, by say the first week of january, because if there's not a deal on january 2nd the market is going to blow up and they will do something then. >> joe greco, are you preparing into? mean, do you want to watch every word out of washington to prepare for the poenlt possibility of going over the cliff and a big selloff to come neck tis? >> i'm certainly sick of looking at the main speaker and the main players in this little charade going on but we do have to watch it and be prepared because the market does receive when you hear the negative comments, trim
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exposure and as you say we're inching closer and like the gentleman indicated before we i think we get a deal done and really try to push because they know if it gets into the first week of january, the market will absolutely sell off and so are commodities which is starting to deflect a little bit and show we're going to least. people started to take their money off the table saying if deflation hits if we don't meet the number, we'll have a big problem. >> meanwhile, do you have that strength, numbers from oracle and other companies that are basically showing a lot of cash on balance street and to strengthen the corporate sector. so what wins out come january? fiscal cliff going over it, near term or longer term solid performance on earnings in the corporate sector? >> longer term and solid performance and i do believe with the previous gentleman, this is a charade, this isn't y 2:00. we're not going to fall off a cliff. everything is not going to collapse on january 1st. what we've got to focus on is
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fixing our problems. yes, we can see a lot of volatility. we can see some downside followed by some very quick side volatility, so i think investors really need to focus on 2013 and improving growth because the u.s. is one of the -- in terms of a developed market, we do have a solid growth rate ahead of us in 2013 as long as we can get our domestic affairs in order. >> how do you want to invest in this environment? when you say getting things in order and longer term the market is okay, what do you want to have exposure to over the near term? >> investors need to have exposure to quality. quality is very important. whether it's large-cap stocks or treasuries, and i do agree with the first gentleman. if we do see a dip, we need to be adding into that dip because we can most likely see a very quick pop back, but quality is very important because we have a risk on, risk off environment it
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seems like almost every day now so quality is the key going forward. >> maria, luce want to make sure you have cyclicals in this environment because if you have an economy that's getting stronger, you have cash on the balance streets and have you an improving global environment and we get a fiscal cliff deal, cyclicals are the ones that are going to be -- be rallying. whether or not they should be or not, whether or not it's a farce what's happening in terms of all of these deficit reduction efforts, bottom line you'll see cyclicals rally. >> yeah. i don't disagree that this economy is showing real signs of improvement whether it's housing or the corporate sector in cash. my question is am i going to be able to get into this market at much lower levels? if we see a big selloff as a result of the fiscal cliff, i want to hold my powder dry and wait until a better opportunity to get in. isn't that right, rick santelli? >> i think there's many retail investors that have that mindset and a lot of the pros may be right if you have a long-term window, the nasty path to get to where we're at in three to five
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years might not matter to some but matters to many. i think the vix isn't the way to capture it. i agree. i think you'll have a chance to buy things lower, and i don't think the fiscal cliff issue will get addressed in a definitive way this year, but i think the time windows of those quick corrections are going to be very short so it will be very difficult to time unless you are ready and you have your orders in and your favorite stocks ready, and don't get suckered into treasury. listen, we all know rates need to go up at some time, but i really do think the rate scenario going up has been more of a year-end event. >> joe greco, quickly on the tax issue. are you seeing a move by investors given the fact we're approaching year end and whatever happens with the fiscal cliff we'll see capital gains taxes higher in 2013 in. >> we've been seeing it across the board in bigger names and the what companies have done with special dividends getting them off their books and on to investors in a lower rate and, of course, we're seeing
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dividend-paying stocks that come due at the end of the week where people are shedding them ahead of that. they will take the wash sale a week or two later. they want to avoid the big tax implications that will come within the next year. >> that's what we're seeing. could be seeing that today. good to see you. thanks so much. appreciate your time. thank you very much. more on this late market selloff coming up in the program. up next, we'll take you live to the white house with the latest debt negotiations to avoid the fiscal cliff. then the head of the campaign to fix the date maya mac guineas is with me and why the plans proposed so far will not do enough to fix the actual problem, the debt, and if you post photos on instagram, listen to this. the company said it will sell your photos to advertisers, yeah, and then they said no, no, no, they are not so sure. now it's not clear what you or your pictures could be exposed to. we'll get to the bottom of it. stay with us on that, and then the democratic governor of illinois has a stark warning about what going over the cliff could do to local economies.
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can't avoid to miss that one. that and a lot more coming up right here on the "closing bell."
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welcome back. the dow jones industrial average closed down nearly 100 points.
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renewed fiscal cliff deals working its way through the market and our own pisani is here with the winners an losers. >> take a look at the dow jones industrial average, folks, and the markets finally winced over the duelling press conferences we had over the fiscal cliff. president obama came out and said the republicans have a hard time saying yes to me. that was one of the stranger things today but john boehner came out and walked off without answering any questions and said he was introducing his plan "b" and offered no counterproposals and in fact largely ignored what the president had to say and that's when we moved to the downside. take a look at vix, volatility index actually showed some life. up about 11%. that's about a one-minute high. sectors not having a very good day. one group that's ignoring all of this action, that's the airline
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stocks, a new high for the airline index, maria, and that's been a big market mover recently on better metrics. two stocks on the downside. general electric. held their 2013 outlook this week and maybe a little sell on the news. it came in pretty much in line and moody's placed alcoa's credit rating on a review for a possible downgrade for lower aluminum prices. maria, back to you. >> the weekend market pinned to a bad day in the fiscal cliff negotiations. john harwood at the white house who had a front row seat in all of this. what can you tell us. >> reporter: as bob pisani just mentioned the discussion today is about that plan "b" that speaker boehner is offering to only raise taxes on million dollar incomes and do nothing on spending cuts until next year. the president came out into the white house briefing room said, and after talking about gun control made the argument in response to questions that they have narrowed their differences
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too much to walk away from negotiations now. >> i've said i'm willing to make some cuts what. separates is probably a few hundred billion dollars. the idea that we would put our economy at risk because you can't bridge that gap doesn't make a lot of sense. >> that wasn't persuasive at least publicly to house speaker boehner who faces a lot of resistance to his caucus on million dollar incomes or 400,000 or 250,000 income. he could pass plan "b" and put the ball right back in the president's lap. >> tomorrow the house will pass legislation to make permanent tax relief for nearly every american, 99.81% of the american people. then the president will have a decision to make. he can call on senate democrats to pass that bill, or he can be responsible for the largest tax
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increase in american history. >> reporter: maria, publicly that gloom reflects the private discussions that i'm heard from insiders who say that they are becoming increasingly pessimistic about a deal, but i've got to tell you, the outlines afternoon deal are still out there. speaker boehner said the president's proposal $300 billion shy of what he calls balance with revenue, and the medicare eligibility age, if you took it from 56 to 67 immediately, that would raise you $300 billion over ten years. can still be done. >> all right, john. we'll watching. we'll come to you for the latest developments. john harwood at the white house. there's a lot of speechifying but are they any closer to a deal? maya macguineas joins us and has been right on about all of these issues. good to sigh again. >> thank you so much. >> i want to begin this and play a sound bite from the president earlier today. see what you think. listen to this. i'd like to get your reaction,
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maya. >> i will not negotiate around the debt ceiling. if you go to wall street, including talking to a whole bunch of folks who spent a lot of money trying to beat me, they would say it would be disastrous for us to use the debt ceiling as a cudgel to try to win political points on capitol hill. >> what do you think about that, maya is the debt ceiling issue? in 2006 president obama called the debt problem a failure of leadership. what's your reaction to what he said today? >> well, the debt ceiling in the past has been used as something akin to a speed bump which kept reminding us, listen, we're borrowing too much. we need to put our fiscal house back on track, and we would sort of use it occasionally to nudge us in the right direction. i think things changed when we actually started talking about the potential of defaulting last year, and the debt ceiling now is more charged, so what we have is a number of potentially really, really dangerous moments. one, going off the fiscal cliff.
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two, if we were to use the debt ceiling and push it too far instead of using it as a reminder we need to make changes but threatening too far so it disrupts markets, and, three, failing to put in place a major comprehensive debt deal, so are you seeing a tense negotiation around a lot of land mines basically that could be used as leverage, but if we push any of them too far we can really damage the country. and i think that's why we're all feeling nervous right now. we know this is an incredibly tense negotiation, the stakes are high and the politics of this is challenging, but there's a real danger by pushing any of these issues too far. we need to focus on bringing everybody to the table and focusing on issues that will fix the debt, structural reform, entitlement reform, reining in our spending, finding a bipartisan solution and getting a solution as quickly as possible so we don't have to threaten ourselves with things like cliffs, debt ceilings and defaults.
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>> i thought this was going to be a real important week and i think you did, too. >> i did. >> in terms of getting a deal done. if we finish out this week and don't get a deal by friday, do you think we're done and they don't come back to the table until after christmas or even after new year's? what's your take on where we are right now >> i don't think we're done. i'm really holing out hope that we can get things done at the end of the week or early in the weekend, but i don't think that if we're unable to make that deadline we're finished, and i certainly don't hi it means we're going off the cliff yet. what is happening is you're feeling more pressure against the policies that we all know need to be part of this deal, and instead of both sides focusing on what they don't want to do, we need to go back and start the focus of the discussion on why it's important not to go over the cliff, but really why it's important to put this in place, fix these problems on all sides of the budget, and hopefully really unleash growth potential in the economy by adding the potential for a big debt deal.
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the political downside for both leaders and parties is in place and i hope that keeps them pushing and talking and working this out all the way up until december 31st and i think they get it done significant police before the final deadline. >> earlier i was looking at the three drivers of our debt, medicare, medicaid, social security. do you agree that those are the three biggies in terms of the drivers of the debt, and do any of these matters being negotiated now, you know, taxing the wealthy, changes to social security, do -- do they actually fix our long-term debt problem? >> so i do agree. i was listening to that part of the conversation before. listen, the biggest challenges we have in this country are by far growing health care costs. health care costs are growing so much faster than the entire economy, squeezing out all priorities. that needs to be addressed through our entire health care system and looking at how we finance health care through the tax code, and our biggest program in medicare and medic d medicaid. second issue is the aging of the
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population, and, yes, social security is an issue that can be treated differently, but the notion that we should be delaying, fixing this system so that it's strong and actually on track to be sustainable which it's not right now makes no sense. the way we want to fix it is to make sure that it's there for people who depended on it in the future. you've got to start making those changes as quickly as possible. that's what the trustees of the program tell us every year and then policy-makers kick the can down. the third piece is there is an agreement that we need to raise revenues, and that is the case. we should think about how we raise those revenues, and all of these changes that have to be made should be done with an eye towards how they are most consistent and conducive to economic growth, and preserving these programs for the people who need them, but what you're seeing again, people lining up on both sides saying don't do this. don't do this, and as you were pointing out before we know we need to make the changes, and we've got to focus on the smartest ways to get them made as quickly as pock. >> and i feel like america knows we need to make the changes.
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medicare has never been changed since it was first put into place. you know, what do you think it's going to take to actually get things done here? i -- does it surprise you that we don't have a deal yet at this time in the calendar? >> i don't know that it surprises me we don't have a deal yet because the unfortunate truth about washington negotiations is anything hard doesn't tend to happen until the very last moment, and let me be honest about that. that has real economic consequences and costs. it's already harm our economy that we're waiting so long, but what i really think we need to see, and you're right, voters outside of washington understand these issues, but we need real honest discussion with the people people where instead of both side pretending that you can get this without the tough choices and going back to the bases and saying there are things you don't like and instead of the conversation always being us and them, two sides fighting it out instead of the country, i think you need to see politicians come together.
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i think you need to see bipartisan discussions and have an honest discussion with the american people, and the my sense of this having talked in town halls across the country is voters would be really happy to have their political leaders come out and say here's what we're going to ask of you, and in return when we put a real debt deal in place this is the upside of putting that stability in place. this is the upside of knowing that these programs will be there and how they will work and businesses will be able to start to be unfrozen and make investments and job creation can come back. we're not going to see that kind of growth without a real understanding of what's around the next fiscal corner. right now we have no idea, but i think we need a more honest discussion, and i think we need stop having, it pitting two sides against each other when there are hard choices to be made. we know they need them to make the choices together. >> no doubt about it, and the markets would like it as well. every time they feel like a whiff of progress, this market rallies. we'll be watching, may a. hope come back soon to talk more about it. we'll see you soon. >> thanks so much.
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>> remember too big to fail? even amid the fiscal cliff storm, the winds of change are swirling around financials. up next republican senator david vitter joins me with a big push for a closer look at the big banks and partnering with this with a key democrat and the governor of illinois is here talking about gun control to the fiscal cliff. wait until you hear what he says will happen to his state's economy if they go over the fiscal cliff. be right back. if you think running a restaurant is hard, try running four. fortunately we've got ink. it gives us 5x the rewards on our internet, phone charges and cable, plus at office supply stores. rewards we put right back into our business. this is the only thing we've ever wanted to do and ink helps us do it. make your mark with ink from chase.
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welcome back. a bipartisan group of senators want to know if the nation's biggest banks, those with $500 billion and more in assets, are getting preferential treatment in the marketplace. they have asked the government accountability office to ask x if so-called too big to fail banks get better credit terms and ratings than its smaller counterparts because the markets believe the government will bail them out if they get into trouble. louisiana republican senator david vitter co-authored the bill and joins us from capitol hill. >> good afternoon, maria. good to be are you. >> do you expect the gao will find evidence that the nation's biggest banks are getting preferential treatment? >> i do expect that. i think too big too-to-fail is alive and well. i think the markets know it, and i think the markets respond by giving too big to fail banks preferential treatment based on the biggest insurance policy
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imaginable. >> when you say preferential treatment, what do you mean? >> that's why we're asking for the gao study. i'm laying out my suspicions, but it could involve a lower lending rate, for instance, when banks are borrowing money. it could involve a lot of lower rates and costs associated with too big to fail banks versus other institutions. >> what other issues do you want the gao to investigate? >> this is very focused on the concept and reality of too big to fail, and is that perception in reality causing market distortion distortions in favor of the too big to fail institutions? that's something that's been debate and talked about. we're trying to get to the bottom of that in a fairly systematic acdehm democratic way so that we can have a serious discussion of it. >> so do you have any evidence that they are getting preferential rates? >> well, sure.
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for instance, we're debating an issue right now, continuation of a program that a lot of regional banks want, of insurance guarantees for certain types of their funds, and they say if this program which exists now stops existing after december 31st as is slated, they will have a lot of deposits leave and go to too big to fail institutions because of that aura of too big to fail and protection that a lot of customers will move their money because they think it's safer there. money beyond the fdic insured limit so that's just an example of the sort of market distortions that could be taking place. >> over in the house democratic congressman brad miller sent a letter to the fdic calling for a break why you of the big banks. do you agree and think regardless of what the gao finds you would also agree that you want a breakup of the big banks? >> no, i haven't gone that far.
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what i have focuses on with my colleague sherrod brown is somewhat higher capital requirements. i think that would be a much less government intrusive way to address the situation. that would either make the big banks spin off some parts of their businesses to come down in size or the taxpayer would have a lot more protection before the next bailout because the mega banks would have more capital. >> dodd/frank was supposed to end too big to fail. how come we're still talking about? >> because if my opinion it's institutionalized. hasn't end it had at all and that's one of the leading reasons i'm against dodd/frank at all. >> what's the point of dodd/frank if one of the key elements of it isn't even doing anything and the rest of it, it's not even implemented yet? >> well, you know, i'm probably not person to ask to defend dodd/frank because i voted against it. i was against it really every
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step of the way. in terms of what it was about, i would point to a very early quote from rahm emanuel, then white house chief of staff. he said, talking about the 2008 financial crisis, we're not going to let a good crisis go to waste. i think dodd/frank was 90% about advancing a pre-existing political agenda, not solving real problems that existed in the 2008 crisis. >> yeah. i think you're not alone this that belief. senator, good to have you on the program. >> thanks, maria is there we'll be following your work. see you soon. up next, general partner jeff jordan is sounding a warning to traditional retailers and all investors need to hear this one and outrage across the web about instagram's plan to sell your photos that you post. we'll get to the bottom of this. stay with us on it. ♪ [ male announcer ] how could a luminous protein in jellyfish, impact life expectancy in the u.s.,
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welcome back. states are brace for huge cuts in aid from washington if we go over the fiscal cliff, particularly illinois. some government experts say the state could lose $1 billion in federal revenue.
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higher than for other states. the pew center is saying that that's because illinois gets 8.5% of its revenue from federal sources, above the 6.6% national average. joining us now to talk more about that and what's at stake for illinois and the rest of the country, democratic governor pat quinn. governor, good to have you on the program. thanks so much for joining us. >> thank you, maria. >> walk us through this and put it into perspective. how much does the state of illinois stand to lose if we go over the cliff? >> well, we have to deal with fundamental issues, unemployment insurance, health care costs and also helping people who need education, early childhood education is exceptionally important to all of us, and we get help from the federal government, and we want to keep that going. it's the best investment in our country's future and pays great dividends, so cutting off that federal aid, especially to poor children, is the wrong policy all the time. >> so are you planning for the possibility of this? i mean, here we are with just a few days lest in the year.
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what are you doing about this? >> well, we have to be prepared in case of disaster, and it would be a disaster. ordinary everyday hard working people who depend on all of us to help them when they need a helping hand. i'm confident that the president can navigate us through this though. he comes from illinois. he understands firsthand that we have to fight poverty. we have to also make sure that we have jobs and economic growth, and i'm hopeful of getting a good settlement to the fiscal cliff. >> all right. so you're expressing full confidence in the president in terms of brokering a deal. why do you think he's been unable to do it so far? mean, what's the problem here? >> takes two to tango you know. we have to get speaker boehner to understand that working together for the common good is the best way to go. all the time, for america. bipartisan approach that the president has presented, he's made some compromises, and i think the peeker has to do the same. that's really america at its best, and certainly in the aftermath of last friday we
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understand more than ever that we're all americans. we have common things, common values that we work together on, and one of them is making sure our country goes forward when it comes to our economy and not put it in dire straits. >> you know, it's really amazing to watch the back and forth, and you've got to run your state, come up with your budget. at this point with just a few days left in the year, are we already seeing this bleed into 2013 in terms of the impact of the uncertainty? >> i think there's no question the uncertainty is hurting some of our major businesses. we have companies like caterpillar and john deere that do business in our state, headquartered in illinois, and there are investment decisions obviously. they want a predictable situation, and that's why it's so important that republicans join together with the president to work these issues out, these fiscal issues out so we can have a good business climate for investment to take place and job creation. that's what we're all for. there's no such thing as
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republican jobs or democratic jobs. they are american jobs, and these negotiations are really central to a job growth economy. >> so what do you think seeing where you sit would be the important or easiest ways to cut spending? >> well, we've done it in illinois. we've cut our spending back to 2008 levels, and we may have to go back even further in the coming year. having said that, the federal government has to make economies, but we have to have a fair tax structure in order to have good economic growth during the few. we learned during the time of president clinton that having a fair tax structure based on a little higher rate on the well-to-do, that's a good way to growth economy. we have to have adequate ref two to pay for important things that everybody wants. that starts with public safety. we know firsthand in america that that is very important to the common good. public safety. we have to invest in it, and that's one of the reasons why revenue is needed. >> do you think that taxing those making over $1 million makes sense then?
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>> well, i think $250,000 was a fair number. i think the president compromised and went to $400,000, but i think a million is a little too high. a lot of folks are blessed making over 400k a year, and if they pay a little bit more they help the common good. that's what america, is helping everybody. >> even though that's not going to move the needle on our debt. >> well, i think one thing that most of the needle on the debt is making reasonable economies in spending. the president has proposed some ideas in that area. i think if we can come together on the revenue and the spending reductions, now is the time to do it. this is the right time. all the time to put everyday people first. >> governor, good to have you on the program. thanks so much. >> same here. >> we'll see you soon. governor pat quinn joining us. up next, don't post that photo on instagram until you hear the next segment. is the facebook-owned company going to seize the rights to your picture and jeff jordan used the -- he was the ceo of
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open table, and now he manages his firm's investment in a number of technology companies, including facebook. we'll find out what he thinks about the company's instagram controversy. stay with us. >> we'll toast today's close with this. toys "r" us is among stores adding hours on the last weekend before christmas keeping most of its stores open for 88 hours straight. so which toys are expected to fly off the shelves? the top toys for christmas next. to the best vacation spot on earth. (all) the gulf! it doesn't matter which of our great states folks visit. mississippi, alabama, louisiana or florida, they're gonna love it.
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♪ welcome back. instagram is finding that pictures are worth much more than 1,000 angry word. images like these are popping up all over the social media site. after the company updated its user agreement to see it would have the right beginning in january to sell posted photos without user permission or compensation for use in advertising. some users are cancelling their accounts. national geographic suspended its account expressing concern over this policy. kevin systrom, the ceo of
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instagram, tried to clarify the company's position but said the company wasn't doing it. some think instagram and facebook facebook have a real problem but this business insider says the anger is temporary and could be a major source of revenue for the company. good to see you both. thanks for joining us. john, you say the company made a big blunder here >> i see this primarily as a customer relations mistake. everyone uses information the data that we share voluntarily and find ways, especially facebook, not to piss people off this much. i think they have to walk this back and apologize, and they can do exactly what they say they are going to do but with their members, not in spite of them. >> a number of users have in fact deleted their accounts. they say they are not going to agree to something without their permission. what's your take on this? >> i think people are a lot of talk. i mean, instagram fully admitted
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they messed up. it was a bit of a pr blunder. now they have gone back and said whoa, whoa, whoa. we hear why you're concerned and we're going to fix it. they also said the reason they didn't roll out the terms of service immediately and gave it 30 days is because they wanted to hear from the community. wanted to hear their concerns and now they are fixing it and backtracking it and in a week this is gone and they won't have to worry about it anymore. >> we all are -- we get up in arms over piracy. we get up in arms, when you know, the chinese have our movies and media copied and -- and get music for free. and yet for an individual you think it's okay for instagrams to just use their pictures that they took. >> i don't think instagram is going to be using anyone's photo in that way. what they said is we want to start monetizing this. we have over 80 million users. they have more active mobile users than twitter does so it makes sense for them to start turning this into a real business so what they want to do is take the location data, maybe
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a little bit of context you put around your photo, anyways and target ad so -- >> they don't own the pictures. they don't own the pictures and they are not getting permission from users. >> you're not going to see instagram take an amazing poster and blow it up into a poster and sell it in new york city. they won't overlay any logos on top of it, like what twitter does with a promoted tweet where they say hey, coca-cola, would be a great person for you to follow on instagram. here's their ad. it's -- >> how do you know they are not going to use it? what's the difference of selling it on the corner in a new york city street than doing it online? it's actually worse because you're getting exposed to so many more people online and how do you know they are not going to do any of that? >> for one they said it. last night kevin systr ho m said it was never to sell your photos in any way because they are yours and we won't tamp we are
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that. don't break a good thing so they will leave that alone. he explicitly said that and they are modifying the terms right now to reflect that language. >> john, how does this play out? >> they haven't actually apologized at all. they said we were misunderstood. they understand words have meaning but apparently don't have the same meaning that i think they have and other people that find this to be, again, a pr blunder, not so much an issue of how they are going to make money off of this which everyone agrees they have to do. the problem is that the company is worth, because facebook decided to write a big check, nearly $1 billion. that suddenly makes it incumbent upon them to make huge stacks of money. if kevin and his co-founder and ten other people that had been building the company decided to sell this as a subscription instead of for a lot of money for facebook, they might have been able to do something with their users, $10 a year,
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something like that, and make the money they needed then. now they need a lot of money. >> yeah. this is a good story, i'll tell you. we'll be following this because people were taken aback by even the prospect. thanks so much for joining us. we'll talk to you soon on this developing story. we appreciate your time tonight to you both. >> thank you. >> let's send it over to brian schactman who has a quick market flash. >> bed, bath & beyond, bbby down almost 4% in after-hours trading. a slight beat on eps and buying back $2.5 billion in stocks but a lot of negatives. revenue is pretty weak. guidance weak and margins as well as comps were a disappointment against wall street estimates and that's why it's sharply lower. maria? >> thanks very much. we'll check back. my next guest manages his firm's size and investment in facebook. i'll ask him how that instagram trouble will impact the company and is sounding the alarm for
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traditional retailers. back after this. ♪ [ male announcer ] you build a reputation by not breaking down. consider the silverado 1500 -- still the most dependable, longest-lasting full-size pickups on the road. and now we've also been recognized for lowest total cost of ownership -- based on important things, like depreciation, fuel, and maintenance costs. get 0% apr financing for 60 months plus $1,000 bonus cash. plus trade up for an additional $1,000. from outstanding value to standing the test of time,
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chevy runs deep.
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welcome back. my next guest is a major
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technical director and works for a silicon valley company. thanks so much for joining us. >> thanks so much for having us. >> i know you've been talking a lot about retail. want to get your take on retail versus technology so we'll get into that in a moment. you just saw the instagram debate, and i know you don't want to talk too much about facebook, but is that right what instagram is doing? >> typically when you redo your user agreement, you try not to do what insta dwrgram just did. >> are they going to sell the pictures or not? >> i have no idea other than what ably in the press. >> would you change your ideas about the company if, in fact, they were impacted by these ideas that they're hitting our privacy? >> i mean, we were investors in instagram -- >> were. >> before it was sold to facebook. we think they built a very useful service. this would be an interesting wrinkle that would slow you down. >> i see, okay. because i think that the analogy
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i made in terms of china, everybody is mad at china for selling our movies and music, but yet for an individual, you don't have that kind of right. you own the picture, you took it. >> intellectual property. >> facebook owns instagram. do you think this was a shocker? >> i know those guys, they're really intelligent, they typically try to do things the right way and this one apparently got a little away from them. >> we were talking for a long time, we have been talking for a lock time about retailers going out of business bought of dot comes. what's new here? >> the share of retail done by the online players just keeps expanding in the key categories. basically everything other than what you consume, grocery and drug, is the online guys are getting more and more share. the retail pie is only so big. online guys extend their share of the pie, the part left for the physical guys, it shrinks and they've got such high fixed cost structures that they can't survive that. and so, the logical implication for a lot of these really
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historically successful retailers is, they're gone. >> and you heard about best buy is an example. talk to me about best buy versus amazon. >> amazon is probably the toughest commerce competitor you can ever imagine. what he does is, he's gone to enormous scale and recycles the benefits into more and more competitive prices. his cost structure is so advantage relative to best buy that he is us undercut them on price, every single time if he wants. so, if you're best buy, they are now tries to price match and things like that, but you can't price match when your cost structure is so much higher than your competitors. >> do you think best buy goes out of business? how does this play out? >> i cannot see a world with best buy pursuing their current model where they continue to be a growing concern. >> what about best buy.com? doesn't that do something? >> you've got a terrible challenge as a physical retailer going online in that they typically want to keep price parity. if your prices are set by your bricks and mortar cost structure, you're going to be
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overpriced online. if you start overcutting your bricks and mortar structure, i've never seen a retailer willing to do, you know, you kill your stores. >> that makes a lot of sense. best buy could, you can't imagine it's going to continue as a growing concern. what other retailers are going to be under pressure? >> i think it's retailers in home, apparel, clearly electronics. really the hard goods side where things are easily price compared, are really challenges. when we invest, we try to find people who are not selling what amazon sells. we're investors in fab.com. they aggregate national designers, the great, talented designers that struggle for national exposure. we are looking for the people that are trying to dance around the amazon bear. >> meanwhile, you have so many new companies sprouting up, like, so much entrepreneurialism going on across the country, when you look at a firm like oober, black cars, private
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chefs, what's going on, can you sort of navigate for us what is going on in technology? >> you know, a ton, the innovation that's going on in the valley is just stunning. it's one of the few things that makes you optimistic about the american economic situation. >> you're right. >> so much is coming. couple trends in what you just mentioned, one is the share economy, ebay, uber, get around. the other is marketplaces, where the internet can create opportunities for small business people to be discovered in a marketplace. open table was such a marketplace, ebay is, there's ones around maids, ones around mechanics. >> private planes. so, you're allowing sort of the middle earners to have access to so many more things that at one point, the highest earners only had access to. >> right. and enabling small business people to have access to consumers where they used to be the province of people that could spend huge marketing
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dollars. >> what do you look at to indicate if we're at another bubble right now for technology. are we? >> we don't think so. my partner argued we're in a tech recession because the multiples are at historic lows. i think before facebook went public, the late stage pry vault market felt frothy. we actually sat out of late stage investing for about a year because we couldn't wrap our arms around the evaluation. we advice companies to fund raise before facebook went public. there was on down side from that valuation at the time. at this point, you are seeing the late stage stuff is getting priced a lot more like the public market comps, which is, for us, a healthy sign. >> and you've got real earnings and real ever knew. >> which is also important. jeff, great to talk with you. >> thank you. >> thank you for your time today. jeff jordan. after the break, my observation on why we don't have a deal in washington yet and how we might be able to get there. stay with us.
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excuse me, sir i'm gonna have to ask you to power down your little word game. i think your friends will understand. oh no, it's actually my geico app...see? ...i just uh paid my bill. did you really? from the plane? yeah, i can manage my policy, get roadside assistance, pretty much access geico 24/7. sounds a little too good to be true sir. i'll believe that when pigs fly. ok, did she seriously just say that? geico. just click away with our free mobile app. and finally today, my observation on what happened today with the fiscal cliff. with time quickly running out,
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today was clearly a case of too much talk and not enough action. in our nation's capital. as the dow had its worst day in a month. let's count the news conferences and statements with e got with just seven trading days left and the deadline, what a massive tax increase on americans, coupled with blunt spending cuts, could likely send our economy back into a e are session. we had speaker boehner first. it was the president speaking about gun control. but the questioners focused on the fiscal cliff. the president seemed to insinuate that we don't have a deal because the gop has a personal problem with him. saying, quote, it's very hard for them to say yes to me. then, it was speaker boehner's turn. he blasted the white house and added the house would vote tomorrow on his plan b, which has, of course, no chance of passing the senate. but might offer him and fellow republicans political cover if we go over the cliff. and earlier, seen right here on this program, we heard from nancy pelosi.